The BOP and Performance Contracting

The Federal Bureau of Prisons has made extensive use of performance contracting for several years and it has enabled them to accomplish many of the sustainable projects they have initiated in recent years. Several of these projects will be discussed in our upcoming webinar on Nov 9 at 10:30 AM. Be sure to join us. You can register at www.greenprisons.org and it's free!!!

Energy Savings Performance Contracts in the

Federal Bureau of Prisons

Hilary L. Martinson, Senior Acquisitions Officer, Procurement Executive’s Office, Federal Bureau of Prisons, U.S. Department of Justice

The Federal Bureau of Prisons (BOP) has discovered that Energy Savings Performance Contracts (ESPCs)can be a winning solution―both environmentally and financially―for Federal agencies and the energy service companies, or ESCOs, with which they partner. But what exactly is an ESPC?

An ESPC is a unique type of government contract that was authorized by the Energy Policy Act of 1992 and is now authorized by the Energy Independence and Security Act of 2007, 42 U.S.C.§ 8287. Relevant regulations include the Department of Energy (DOE)’s implementing regulation on ESPCs, 10 C.F.R. part 436.34, and the Federal Acquisition Regulation (FAR).[1]An ESPC enables a Federal agency to reduce its energy consumption in a particular facility by installing energy conservation measures (ECMs).[2]An ESPC, or the updated and streamlined “Super ESPC,” begins with the DOE’s Federal Energy Management Program (FEMP) office competitively awarding indefinite-delivery, indefinite-quantity (ID-IQ) prime contracts to several energy service companies. Federal agencies subsequently create their own ESPC projects by issuing delivery orders under the prime ESPC. The ESCO is then “paid” by receiving firm-fixed payments over time that are less than the agency’s yearly guaranteed cost savings. Unlike other government contracts, the project costs are paid by the savings achieved over the course of the contract. Moreover, if savings guaranteed by the ESCO do not materialize, the ESCO reimburses the government for the shortage.
How is the BOP implementing ESPCs?

In the BOP, the use of ESPCs has been steadily implemented since a solar thermal system was installed at the Federal Correctional Institution (FCI) Phoenix, Arizona, in 1998 through an ESPC.[3]This renewable energy system satisfies 70 % of the hot water requirements at the facility, producing up to 50,000 gallons of hot water each day for kitchen, shower, and laundry use.

The Federal Corrections Complex (FCC) Victorville, California, won DOE’s 2006 Federal Energy and Water Management Silver Award for its efficient use of energy, which includes the use of a 750 kilowatt wind turbine, which produces 30 percent of peak electrical demand for one of its institutions, and the use of 300 solar photovoltaic (PV) panels. FCC Victorville also received several upgrades to its heating, ventilation, and air conditioning (HVAC) systems.

In an effort to improve energy and water conservation, FCC Petersburg, Virginia, implemented an ESPC with the ESCO’s initial investment totaling $10 million. The 12 ECMs include a biomass boiler system, dry heat receiver, six electric vehicles for perimeter use, an air cooled chiller, ozone laundry (i.e., a cold water wash system that reduces washing and drying times and chemical usage), a steam system and control upgrades, ground source heat pumps, and a solar PV system. On an annual basis, the ESPC is expected to save FCC Petersburg 34 billion British Thermal Units (BTUs) of energy and 70 million gallons of water.

A recently implemented ESPC at FCC Lompoc, California, will significantly reduce Operations and Maintenance tasks during the contract’s 13-year period of performance and contains 11 different ECMs, including lighting and boiler improvements, renewable energy systems, refrigeration, and improvements to the HVAC and water and sewer systems.The changes are expected to result in an annual reduction of 47,374 (btu x 10ᶺ6).

At BOP’s FCC Beaumont, Texas, an ESPC awarded in 2009 will annually reduce 65,928 of energy (btu x 10ᶺ6). The initial project investment by the ESCO includes several ECMs, such asboiler and chiller improvements, building automation systems, lighting and HVAC improvements, renewable energy systems, electric motors and drives, energy surveys, and water and sewer systems improvements.

Other BOP facilities are utilizing ESPCs to achieve greater energy efficiency. A list of ID-IQ ESPC-awarded delivery orders and task orders from FY 1998 – FY 2011 may be found at DOE’s Energy Efficiency and Renewable Energy website: www1.eere.energy.gov/femp/pdfs/do_awardedcontracts.pdf.

Conclusion:

An ESPC is a vehicle that enables Federal agencies to pay for the costs of energy savings projects over the course of the contract performance period from the guaranteed realized savings. Agencies can upgrade and improve facilities and meet their energy conservation goals without expending large amounts of capital for equipment, materials, and labor. BOP has implemented approximately 22 such contracts to date.

[1]See FAR section 23.205,Energy-savings performance contracts, and subpart 17.1,Multiyear contracting.

[2] General information on ESPCs was obtained from the Department of Energy’s Federal Energy Management Program (FEMP) website, www.eere.energy.gov.

[3]See Greening Federal Prisons: Meeting Future Demands, Corrections Today, June 2009 and Heating Water with Solar Energy Costs Less at the Phoenix Federal Correctional Institution, www1.eere.energy.gov/femp/pdfs/33211.pdf (visited on April 13, 2011).